VCE controls 57.4 percent of the integrated infrastructure systems market, with HP (NYSE: HPQ) taking a 24 percent market share and Hitachi 15 percent, according to Gartner stats. Market revenue grew 53.7 percent year-over-year in the second quarter of 2012, but accounted for only 3.5 percent of the $83 billion data center hardware total in 2011, according to a Gartner report provided to FierceEnterpriseCommunications by VCE.

In addition, VCE announced that it is beefing up its Vblock system converged infrastructure offerings by launching two smaller models to its line-up of integrated services and network switches.

Last week, VCE launched the Vblock System 100 and 200. "These are targeted at enterprises with distributed operations or remote branch locations," explained Todd Pavone, executive vice president of product development and strategy at VCE. The 200 in particular is targeted at the mid-sized enterprise market, "which can leverage the 200 to run their data centers in the core," Pavone told FierceEnterpriseCommunications.

In addition, VCE is beefing up its larger Vblock Systems 300 and 700 products to increase capacity and performance, providing greater flexibility for compute, networking and storage resources.

VCE also launched last week its Vision Intelligent Operations software, which provides a customer management framework for Vblock systems. Through collaborative engineering work with VMware, the software integrates with VMware's virtualization and cloud management portfolio. VCE Vision also supports open application programming interface integration with other management toolsets.

"We see a data center vision where customers are not going to be in a reactive mode anymore. There is going to be a set of business and infrastructure policies to manage the data center automatically and dynamically across geographic boundaries," Pavone enthused.

VCE appears to be succeeding with its vision. In the most recent quarter, it surpassed a $1 billion run rate and shipped its 1,000th Vblock system.

However, according to Securities and Exchange Commission filings cited by ZDNet, EMC has lost $430.2 million on VCE, while Cisco has lost $325 million on the venture. VCE was formed in 2009 by Cisco and EMC with investments from Intel (Nasdaq: INTC) and EMC's VMware subsidiary.

VCE's leading challenger, HP, countered last week with an extension of its converged infrastructure offerings. HP unveiled a new HP BladeSystem as well as new converged storage and networking products that combined wired and wireless infrastructure. HP claimed that it had a 71 percent win rate against Vblock/UCS in the August to October 2012 quarter.

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